Measuring Inequality in India: Why Gini Isn’t the Whole Story 

Introduction

In April 2025, a government release claimed that India is “one of the most equal societies today”, citing the World Bank’s latest Poverty and Equity Brief which showed India’s Gini Index at 25.5, making it the fourth most equal country after Slovak Republic, Slovenia, and Belarus. This claim has been contested both by academics who study inequality, as well as observers who see India as a country with high and rising inequality.

 

What is Inequality? Oxfam’s Perspective

The concept of Inequality is not just about income, but it is multi-dimensional about who gets a fair chance—in jobs, health, education, and influence. Oxfam defines it as:

“The gap between the richest and the rest—not only in income, but in access to basic services, opportunities, and influence over decisions that affect their lives.”

Oxfam India 2025 reports that the richest 1% hold over 40% of the nation’s wealth; the bottom 50% barely own 3%. This divide is not merely economic but have impact on other spheres as well like —social harmony, justice, resilience in disasters, even our ambitions as a democracy.

 

How Do We Measure Inequality? Methods and Global Data

1. Gini Coefficient

It is the most cited measure. It ranges from 0 (perfect equality) to 1 (perfect inequality).

• 0 = everyone earns the same 
• 1 = one person takes all income 

India’s Gini Index (2025, World Bank):

• 25.5 (consumption-based, among lowest globally) 

But here the global context matters alot:

• OECD avg: ~0.32 
• China: 0.47 
• South Africa: 0.63 
• Sweden/Finland: 0.27–0.29 (with strong welfare safety nets) 

2. Other Indices to measure Inequality

• Palma Ratio: Compares income of the top 10% vs. bottom 40%. Many experts find it better for tracking extremes of inequality. 
• Theil/Atkinson Index: Used to track inequality by forming some groups (urban/rural, gender, caste). 
• Wealth Gini: Focuses on asset distribution, which often shows even sharper gaps. 

International Practice:
The UN, World Bank, and OECD increasingly advise using multiple indicators, not just Gini, and urge nations to publish disaggregated data for real transparency.

3. Latest 2025 Data

Indicator	2011-12	2022-25	Source
Gini (consumption)	28.8	25.5	World Bank 2025
Gini (income, WID)	52	62	World Inequality Database
Top 1% wealth share	32%	40%	Oxfam 2025
Top 10% vs. Bottom 10% earn	8x	13x	CMIE 2025

 

The Hidden Gaps: Why Official Measures May Mislead

1. Consumption vs. Income

India calculates the Gini mostly from consumption surveys and not from income. This creates discrepancy because:

• The rich save and invest much larger part of their income than they spend on basic consumption 
• Consumption is less varied than income; so Gini looks “better” than reality.
• Example: A tech CEO and a domestic worker both report household consumption, but the CEO’s stock portfolio and property are not counted.

2. Survey Limitations

• The richest households often avoid surveys. 
• Top 1% are rarely captured. 
• Sample weights may undercount urban or minority groups. 
• Political sensitivity: Data showing rising inequality sometimes gets delayed due to sensitive nature. 

3. Ignoring Wealth Inequality

Oxfam 2025: Billionaires in India added $150 billion in wealth last year—nearly 4 times India’s health budget! Wealth inequality has far-reaching effects: on political influence, disaster resilience, and even climate adaptation.

4. Global Reporting and Benchmarks

Many developed countries (France, Norway) combine income tax, survey, and administrative data for a fuller picture but there are no such practices in India
UN’s Human Development Index (2024): India ranks 134/191, reflecting persistent social and economic gaps despite GDP growth.

 

Why Does It Matter? 

• Access to Health & Education: Inequality means that millions of people lack proper healthcare and schooling, making society less productive and hampers development. 
• Social Stability & Justice: Societies with high inequality face more conflict, crime, and weaker trust in public institutions. 
• Disaster Recovery: The poor suffer more during disasters. Weaker social safety nets lead to slower recovery. 
• Global Standing: A nations image as a responsible, inclusive nation is always linked to how it treats its poorest (Qualitative) not merely GDP numbers(Quantitative). 
• Sustainable Development: SDG 10 (“Reduce inequality within and among countries”) is integral to the UN 2030 Agenda; India reports on these targets at international forums. 

Way Forward: National & Global Recommendations

1. Build Better Data and Institutions

• Set up a Standing Committee on Inequality Measurement (as advised in NITI Aayog discussions). 
• Implement recommendations from the Tendulkar and Rangarajan committees for unified, transparent, and timely reporting. 
• Link survey data with income tax and administrative sources, as per OECD and World Bank best practices. 

2. Go Beyond Gini: Adopt Multiple Indices

• Regularly publish Palma Ratio, Theil Index, and group-wise (gender, region, caste) gaps. 
• Disclose wealth inequality separately. 

3. Align with International Commitments

• Integrate SDG 10 goals, and benchmark progress with UN, World Inequality Lab, and OECD. 
• Share data for peer review and global comparison, enhancing transparency. 

4. Design Inclusive Policies

• Direct health, nutrition, and education schemes to “last mile” populations, learning from Kerala’s local self-governance and Brazil’s Bolsa Família model. 
• Encourage entrepreneurship among underrepresented groups; support “green jobs” as part of climate and disaster resilience. 

5. Strengthen Social Security & Disaster Management

• Make welfare and insurance systems robust enough to help the poorest bounce back from shocks (as seen in Japan’s disaster recovery models). 
• Prioritize transparency and participatory governance—ethics, justice, and accountability matter. 

Conclusion

Inequality is not about numbers, rather it is about the child who was unable to go to school or a man unable to work, or a person who can’t afford healthcare. As UN Secretary-General António Guterres said, “Inequality is a threat to our future.” For India to truly rise, every citizen must have a fair chance, not just the privileged few. A just society uplifts its weakest, not just its richest.